Minister's Gaffe Cuts Right To The Heart Of Saudi Arabia's Labor Crisis

AP Photo / Khalid Mahmoud
Event

In the wake of growing disquiet over the government's increasingly punitive attempts to force companies to hire Saudis, the labour minister, Adel Fakieh, has admitted that 86% of the jobs performed by expatriates are not suitable for Saudi nationals.

Analysis

Mr Fakieh's comment will no doubt have caused some consternation among the country's businesses, which have been struggling to come to terms with the recent imposition of a levy imposed on firms with a majority of foreign workers; according to the new rule, firms must pay an annual fee of SR2,400 (US$640) for each surplus foreigner. By admitting in an interview with a daily newspaper, Al Sharq, that 86% of expatriate workers do "menial jobs that do not suit Saudis", he has in effect acknowledged the unrealistic nature of the target (especially for companies such as contractors and cleaners, which have been most vociferous in their complaints).

Furthermore, in comments that would appear only to reinforce businesses' argument, he acknowledged that fully 86% of expatriate workers in the kingdom receive a monthly salary of less than SR2,000-a figure equivalent to the present monthly unemployment benefit for Saudis, and far below the minimum wage target set by the Ministry of Labour for Saudi workers (any Saudi receiving less than SR3,000 is deemed as being just half a worker according to the labour ministry's categorisation).

With this in mind, it is little surprise that the increased costs confronted by businesses-both in hiring more expensive Saudis, and now paying a higher levy on their foreign workers-are being passed on to the consumer, with the chief executive of the Consumer Protection Association, Nasser al-Toam, saying on December 14th that price rises had already been observed, adding that the new fee on foreign labour "will have negative implications for the consumer". In response, even the country's typically pliant, all-appointed Shoura Council is voicing criticism of the levy, with the Council's Management and Human Resources Committee reportedly pressing ministry officials to reconsider their decision on the new expatriate levy. In light of Mr Fakieh's latest comments, it would seem that they may well achieve their aim.